ford - international, divorce enevitable!

Discussion in 'Trucks and Trailers' started by lawn king, Jan 25, 2008.

  1. lawn king

    lawn king LawnSite Silver Member
    Posts: 2,251

    This looks like its going to get real ugly!

    Lot to like in GM/Navistar deal

    By Sean Kilcarr, senior editor

    Dec 21, 2007 12:11 PM



    Though details regarding the sales of General Motor’s medium-duty truck business to Navistar, the parent company of International Truck & Engine Corp., remain thin at this point, analysts think it’s a good deal for both companies.

    “It’s an opportunity for International to really expand its presence in the Class 3-5 midrange market,” Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), told FleetOwner.

    “International doesn’t have a strong presence in that area and there’s much more growth going on there compared to the Class 6-7 segment,” he said. “Another good thing is that GM recently redesigned its product, so International is not getting something old it must update quickly – it has time to work with it.”

    “In general, this is not a bad deal at all,” Eric Starks, president of equipment market analytical firm FTR Associates, told FleetOwner. “It’s a really good way for GM to stop building medium-duty trucks without letting that business fall off the face of the earth. This way, they are taking care of their customer base.”

    The sale, valued by Bear Stearns analysts at $500 million, comes at a critical time for GM. According to the Detroit Free Press, the automaker sold more than $21 billion in assets over the past three years, posting net losses of $50 billion, including a $39 billion charge in the third quarter alone of this year to cover tax accounting changes. In August, GM sold Allison Transmission to buyout firms Carlyle Group and Onex Corp. for $5.6 billion.

    “They might as well monetize one more non-strategic asset to fund the turnaround,” Pete Hastings, a fixed-income analyst at Morgan Keegan & Co., told the Detroit Free Press. “GM doesn’t have a liquidity problem, but adding more coins to the coffers is never a bad thing.”

    “This will enable GM to allocate more resources on its core: cars and light trucks,” noted auto analyst C. Leonard Bauer, formerly of Prudential. “I like the sale to Navistar in that it gets GM out of a space that did not represent a big gainer. GM has seen the future, and for them it's not in manufacturing mid-size trucks.”

    According to industry estimates, the deal should add $1.5 billion or more to International’s top line revenues. It should fit well with its growth strategy, leveraging GM’s and International’s medium-duty product lines to gain scale and improving International’s manufacturing cost structures.

    “This may really help them with their cost structure, but the biggest thing for International is that it solidifies them as the mid-range leader,” FTR’s Starks said. “They’ve always been a key player – now they are the big boys on the block.”

    One expected casualty of this deal is International’s relationship with Ford Motor Co., already on the rocks over several issues. Though the two have been involved in joint venture to build Class 3-5 cabover trucks since 2001, they’ve been at loggerheads over diesel engines. International, the exclusive diesel engine supplier for Ford’s heavy-duty pickups since 1979, stopped production of its 6.4 liter PowerStroke back in February in a pricing dispute with Ford and only restarted making them under a court order. The issue isn’t minor, as 40% of the 796,039 F-Series trucks Ford sold in 2006 were equipped with International-brand diesel engines.

    “Ford’s bread and butter in the commercial market is Class 3-5, and now International will be going head-to-head with them,” CMVC’s Brady said. “In my opinion, there’s a lot of animosity between them, and my gut tells me Ford may opt out of their diesel engine contract when it comes up for renewal.”

    But Brady stresses that International didn’t buy GM’s medium-duty business just to support its mid-range diesel engine sales. “They are looking at that Class 3-5 market and are seeing a lot of growth, especially over the last 10 years, compared to their relatively more mature Class 6-7 segment, which is growing maybe between 3% and 4% a year. They see this as an opportunity to get into that Class 3-5 segment with a competitive product relatively inexpensively. It’s a no-brainer for them.”
     
  2. Marek

    Marek LawnSite Bronze Member
    Posts: 1,385

    I think its time for a change. My Ford tech told my that they are working really hard with cat for 2010. Not sure if its true but people would line up to buy them.
     
  3. mowing grass 1111

    mowing grass 1111 LawnSite Senior Member
    Posts: 433

    let chevy have the 13 letter **** spreader engine ,,, they have been nothing but problems since the 7.3 . I read somewhere that the cummins contract for dodge was up in a year or two.. if ford could get a cummins in a F 250/ 350 superduty they would rule the market
     
  4. supercuts

    supercuts LawnSite Silver Member
    Posts: 2,784

    hmmm, mixed emotions......how about ford, cummins, and allison??? mmmmm...

    as long as my 08 retains its value which im sure it will. one thing i really do love about my new 6.4L is the way it starts in the cold. i havent used my glow plugs yet and it starts like a gas engine. my 7.3 would have to use the glow plugs 2x, start, run rough, stall, repeat one or two more times before it "runs."
     
  5. lamarbur

    lamarbur LawnSite Member
    Posts: 118

    The IH engines are fine, if left alone, You can't do like Ford has and use software to crank the pressures to Oh my God level and expect not to have problems, Many complained about the 6.0 engines and theyv'e been in school busses for years and you never hear of problems. The difference being the school busses maintain their 250 hp by design and not crank up to 360 by use of a computer,
     
  6. mowing grass 1111

    mowing grass 1111 LawnSite Senior Member
    Posts: 433

    i am bad about not using the glow plugs on my 7.3 ... and i never use the block heater ... i am probably the last person on earth that should have a diesel . when i get in the truck i am ready to go!!!
     
  7. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    It is time for a change, but I really to hate to see GM giving up everything outside of pickups and cars. I wish they still made heavy trucks like they did before the late 80's. Nothing like an old 10wheeler with screamin DETROIT. The old Brigadiers, and Generals where nice trucks, not top of the line but they'd get the job done and look tough doin it.
    It would be nice to see GM trucks with American made diesels again. The only thing I see that will be irritating is lf Fords get a deal with CAT, then all the 'blue Oval' boys will be talkin out the side of there head about some v8 cat they have in thier truck and how much better they are.

    If we could get a Cummins in a chevy I'd be almost beside :)myself.
     
  8. grass_cuttin_fool

    grass_cuttin_fool LawnSite Gold Member
    Posts: 3,503

    Didnt Ford end up with Cummins back in the 90's????? I know it was back in the day when Mark Martin had cummins as a sponsor on the race car. Or has Ford sold them off???

    wayne
     
  9. lamarbur

    lamarbur LawnSite Member
    Posts: 118

    They only owned some stock, and sold it back shortly afterwards, They did not have enough stock for control of Cummins
     
  10. grass_cuttin_fool

    grass_cuttin_fool LawnSite Gold Member
    Posts: 3,503


    Ok I just didnt remember all the details....and I agree with what some one else said....I think they are trying to crank to much HP out of theese engines and that is why they arent as reliable as in the past

    wayne
     

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